Bharti Airtel Q3 Results Review: Analysts Retain ‘Buy’ On Higher ARPU, 4G User Additions
Bharti Airtel reported higher-than-expected Q3 revenue on ARPU growth and 4G subscriber addition.
Analysts reiterated their ‘buy’ ratings on Bharti Airtel Ltd. on its higher average revenue per user, 4G subscriber additions and growth in Africa unit in the third quarter.
The carrier’s net profit fell over the preceding quarter, missing estimates, as finance costs and expenditure, including network operating expenses, access charges, licence fees and marketing expenses jumped.
Bharti Airtel added 30 lakh 4G customers in the third quarter, and 3.41 lakh users in home business. Its ARPU—the amount an operator earns per subscriber per month—rose 6.5% sequentially to Rs 163.
Separately, its board has approved a Rs 7,500-crore fundraise through various debt instruments.
Shares of Bharti Airtel gained as much as 1% intraday on Wednesday. Of 34 analysts tracking the stock, 32 recommend a ‘buy’ and one each suggest a ‘hold’, and a ‘sell’, according to Bloomberg data. The average of the 12-month consensus price targets implies an upside of 21.7%.
Here’s what analysts have to say about Bharti Airtel’s third-quarter results...
CLSA
Mobile data subscriber additions were tepid post tariff hikes, with Bharti gaining a less than-expected 30 lakh 4G subscribers QoQ.
Home broadband subscribers saw strong additions of 3,41,000 and the segment revenue was up 12% QoQ. The digital TV subscribers were up 79,000 QoQ but the segment revenue was flat.
Bharti prepaid Rs 15,500 crore in deferred spectrum liabilities and gearing was comfortable at 2.7 times Ebitda.
Increases FY22/24 revenue and Ebitda forecasts by 1-4% but cuts FY22 profit estimate by 30%.
Forecasts a 15% consolidated Ebitda CAGR by FY24 with Bharti’s 4G penetration at 61% of its own India mobile subscribers.
Maintains ‘buy’ with a target price of Rs 905—an upside potential of 27.7%.
BNP Paribas
Airtel continues to invest heavily in its network, increasing total sites by 10.5% YoY and mobile BTS (base transceiver stations) by 32% YoY.
4G data customer additions moderated QoQ to 30 lakh. The decline in data usage per customer mobile capex during the quarter moderated to Rs 3,000 crore, while non-mobile capex accelerated to Rs 1,680 crore with the investments across B2B, home and digital TV services.
Non-mobile business expansion continues with cities covered rising to 672 vs 219 in Q3 FY21 with a low-capex local cable operator partnership model.
Airtel’s results were ahead of peers and its market share gain should continue. However, at an industry level, subscriber growth is showing signs of moderation due to tariff hikes. The trend is likely to continue for the next one-two quarters as the market absorbs higher tariffs.
Rates ‘buy’ with a price target of Rs 950—an upside potential of 34%.
Motilal Oswal
Consolidated Ebitda grew 6% QoQ led by 6% steady growth in India mobile Ebitda.
Africa continued its healthy Ebitda growth trend with 5% QoQ growth, backed by all-round growth in data and Airtel Money consistently over the past few quarters.
Healthy free cash flows in the quarter, coupled with a Rs 5,200-crore rights issue, which reduced the net debt (excluding lease liability) by Rs 7,430 crore.
With the Google fund infusion and tariff hike benefit, Rs 8,000-10,000 crore deleveraging should flow in over Q4 FY22.
Despite robust data traffic volumes of 113b GB (19 GB/user), data traffic/subscribers are at 50% compared to Reliance Jio, thus highlighting a healthy network capacity and room for improvement.
Home business saw a strong improvement, with 12% and 15% QoQ growth in revenue and Ebitda, 170 basis points margin improvement.
Rates ‘buy’.